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China seeks vast oil blocks in Nigeria

China unlikely to get 6 billion barrels of Nigerian oil : minister
A Nigerian oil minister on Wednesday ruled out granting a Chinese state-owned oil firm the six billion barrels of oil it is after. Junior minister for Petroleum Odein Ajumogobia confirmed that the Chinese made a proposal for six billion barrels of oil from Nigeria, the world's eighth largest oil exporter. "It's true that the Chinese have made a proposal which we are considering," told AFP. "They are asking for six billion barrels of oil from our reserves, but I can tell you that we are not going to give them all of that," said Ajumugobia. The six billion barrels of oil China's largest listed offshore oil and gas producer CNOOC is seeking to buy, is equivalent to one in every six barrels of the proven reserves in Nigeria -- one of Africa's two top oil producers. Earlier Nigeria's oil minister and ex-secretary general of the oil cartel OPEC, Rilwan Lukman, confirmed discussions for oil deals were under way with China, but no final decision has been taken yet. "We are still talking with them and (the Nigerian) government has not finalised its position," Lukman told AFP in an interview. Neither of the two ministers would give further details of the discussions. "It is really too premature to talk about these things now. Whatever I say now may jeopardize the talks in some ways," said Lukman. The bids could pitch China into competition with western oil giants including Shell, Chevron, Total and ExxonMobil which partially or wholly control and operate the 23 blocks under discussion. Sixteen licences are up for renewal. "The Chinese are not the only ones looking for oil and gas access in Nigeria. We are in continuous negotiation with various groups and stakeholders," said Lukman. The overall value of the Chinese offer has not been disclosed, although some details suggest a figure of about 30 billion dollars (20 billion euros). China's government-backed oil companies are seizing on the economic crisis to make landmark overseas acquisitions, in a bid to feed the country's growing economy. (AFP Report)
by Staff Writers
Lagos, Nigeria (UPI) Sep 30, 2009
A state-owned Chinese oil giant is negotiating to buy up one-sixth of Nigeria's known oil reserves, currently owned by Western energy groups, for a reputed $30 billion to $50 billion.

In strategic terms, that would be a major coup for Beijing in its global drive to secure energy supplies for China's mushrooming economy and a serious setback for the United States, which gets one-fifth of its oil imports from Nigeria.

If Beijing succeeds, it would establish oil-hungry China as one of the dominant energy powers in Africa and give it access to oil that the Americans depend on to keep their economy functioning.

However, the Chinese would also inherit a serious problem: the center of Nigeria's oil industry, the largest in sub-Saharan Africa, in the southern Niger Delta is under attack from rebels demanding a share of the country's oil revenues.

The violence, which has raged for five years, has slashed Nigeria's oil production by about one-third. Oil theft is a multibillion-dollar industry in the trouble-plagued delta.

The attacks on oil installations have decreased somewhat since the government declared an amnesty for rebels who surrender. But that is due to expire Oct. 4, and the rebels say they will resume and intensify their campaign if the government fails to meet their demands.

The Financial Times has reported that the China National Offshore Oil Corp., one of China's three major oil concerns, wants to buy licenses for 23 prime blocks currently owned or operated by Western firms such as Royal Dutch Shell, Chevron and Exxon Mobil of the United States and Total of France.

The licenses -- 18 onshore and five offshore -- have either expired or are due to expire over the next few years.

All told these fields contain an estimated 6 billion barrels of oil. That's the same as one of every six barrels of proven oil reserves in Nigeria.

That far surpasses the blocks containing some 4.7 billion barrels of oil China has acquired across Africa in its global drive to secure vast amounts of oil to fuel its mushrooming economy.

Another state-owned Chinese major, Sinopec, bought Swiss oil producer Addax Petroleum Corp. in August for $7.24 billion and acquired Addax's high-potential operations in Nigeria and Gabon, as well as Iraq. That was China's most expensive overseas energy acquisition to date.

Beijing has also bought up rights to oil, as well as other raw materials, across Asia and Latin America. It buys large amounts of oil from the Middle East, but as yet has not been able to buy up exclusive drilling rights in the region.

The FT reported that the negotiations regarding the Nigerian zones, some of the world's richest oil blocks, were revealed in a letter from the office of President Umaru Yar'Adua to CNOOC's representative, a company named Sunrise.

"The overall value of the Chinese offer is not disclosed, although some details suggest a figure of about $30 billion," the FT, which obtained a copy of the Aug. 13 letter, reported Tuesday. "Some oil sector executives said the total on the table was $50 billion."

Although the Nigerian government has said the blocks up for grabs will go "to the highest bidder," it remains far from clear whether CNOOC will sweep the board and take over from Western companies that have long operated in Nigeria.

But the Chinese offer, if the figures cited are accurate, appears to be far above those offered by the Western companies to extend their licenses.

According to the FT, ExxonMobil offered $78 million to renew three 40-year leases that are due to expire soon. The Nigerian government demanded $2.5 billion.

The sweeping Chinese bid in this latest battle for Africa's resources has thus strengthened the government's bargaining position to the detriment of the Western operators at a time when reserves are shrinking and few, if any, new strikes of any significance are being made.

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